Spin Off

Image source: Shutterstock Andrii Vodolazhskyi

What's going on?

Just when you thought you were out, the pandemic pulls you back in: news of a fresh coronavirus strain prompted a market selloff on Friday.

What does this mean?

You can never quite relax in these pandemic-stricken times: surging Covid cases are a constant threat to the worlds already-slowing recovery, and the arrival of a brand new variant has sparked worries that economies might take another hit soon. The variants suspected to have caused a surge of South African cases last week, and global health officials reckon it could both spread faster than Delta and better evade our vaccines. That means it has the potential to send countries back into the depths of lockdowns, which would cripple economies around the world. At least governments are acting fast: plenty of countries have already reimposed travel restrictions to try to limit the spread.

Why should I care?

For markets: Stocks get grounded.
Stock market indexes around the world plummeted on Friday, as concerned investors started selling off stocks and buying so-called safe haven assets like gold and government bonds instead. The prospect of travel restrictions hit airline stocks particularly hard: British Airways parent IAG initially saw its stock fall by 21%. There is at least one company that could benefit if restrictions come back into force, mind you, which might be why Zooms stock rose 9%.

Zooming out: Dont believe the hype.
Take those investor reactions with a pinch of salt: professional investors are taking a break for the holidays, which means theres been a lot less trading activity than usual. The trades that are being made, then, could be having a much bigger impact on the wider markets than they would do normally. Plus, it was a Friday: investors and traders might just be keen to get rid of their risky assets before the weekend, in case more bad news comes out when markets are shut and they cant do anything about it.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Dressing Down

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.